AAR CORP. (NYSE: AIR), a leading provider of aviation services to
commercial and government operators, MROs, and OEMs, today reported
second quarter fiscal year 2024 consolidated sales of $545.4
million and income from continuing operations of $23.8 million, or
$0.67 per diluted share. For the second quarter of the prior year,
the Company reported sales of $469.8 million and income from
continuing operations of $22.5 million, or $0.64 per diluted share.
Our adjusted diluted earnings per share from continuing operations
in the second quarter of fiscal year 2024 were $0.81, compared to
$0.69 in the second quarter of the prior year.
Consolidated second quarter sales increased 16%
over the prior year quarter. Our consolidated sales to commercial
customers increased 24% over the prior year quarter, primarily due
to strong demand for our new and used parts offerings, while our
consolidated sales to government customers increased 1%. Sales to
commercial customers were 71% of consolidated sales, compared to
66% in the prior year quarter.
“We drove another quarter of double-digit sales
growth in our commercial business with strong USM and new parts
distribution volumes in our Parts Supply segment. Additionally, the
recovery in global flight hours led to growth in our Integrated
Solutions segment. Demand for MRO services continued to be strong
and our hangars remained largely full throughout the quarter,” said
John M. Holmes, Chairman, President and Chief Executive Officer of
AAR CORP.
Gross profit margins were 19.0% in the current
quarter, compared to 18.3% in the prior year quarter. Adjusted
gross profit margin increased from 18.8% in the prior year quarter
to 19.0% in the current quarter, primarily due to the favorable
impact of our operating efficiency on increased sales
volumes.
Selling, general, and administrative expenses
were $65.7 million in the current quarter, which included $3.1
million related to acquisition and amortization expenses and $2.6
million related to investigation costs. As a percentage of sales,
selling, general, and administrative expenses were 12.0% in the
current quarter, compared to 11.2% in the prior year quarter.
Excluding acquisition and amortization expenses and investigation
costs, selling, general, and administrative expenses as a percent
of sales remained consistent at 11.0% of sales in the current and
prior year quarters.
Operating margins were 7.0% in the current
quarter, compared to 6.9% in the prior year quarter. Adjusted
operating margin increased from 7.6% in the prior year quarter to
8.1% in the current year quarter, primarily as a result of the
growth in commercial sales. Sequentially, our adjusted operating
margin increased from 7.3% to 8.1%, driven by improved
profitability in our airframe maintenance facilities.
During and subsequent to the quarter, we
announced multiple new contract awards, including:
- Extension and expansion of our
airframe MRO services agreement with Alaska Airlines, including the
corresponding anticipated construction of a new hangar at our Will
Rogers World Airport location in Oklahoma City
- Multi-year contract extension with
MTU Maintenance, the global market leader in customized solutions
for aero engines, to supply parts for Pratt & Whitney PW2000
engines
- New multi-year distribution
agreement to supply Woodward’s fuel control products to the Defense
Logistics Agency under our Supplier Capabilities Contract (Captains
of Industry)
- New multi-year Airinmar services
agreement with Turkish-based low-cost carrier Pegasus for warranty
support services
Holmes continued, “We delivered our 11th
straight quarter of operating margin expansion as a result of our
improved operating leverage and the favorable contribution from our
Trax acquisition. Additionally, we are proud to have secured
multiple new business wins across our segments as the demand for
our services remains extremely strong.”
Net interest expense for the quarter was $5.6
million, compared to $2.0 million last year. Average diluted share
count increased from 34.7 million shares in the prior year quarter
to 35.3 million shares in the current year quarter. We have not
repurchased any shares during fiscal year 2024 as a result of
deploying capital towards other attractive investment
opportunities.
Cash flow provided by operating activities from
continuing operations was $17.4 million during the current quarter
with no change in the amount outstanding under our accounts
receivable financing program during the quarter. As of November 30,
2023, our net debt was $211.9 million and our net leverage was
1.01x.
Holmes concluded, “Finally, we were excited to
announce our agreement to acquire Triumph Group’s Product Support
business this morning. This highly strategic transaction is
expected to meaningfully improve our operating margins and
consistent with and accelerates our stated strategy to add
differentiated capability to our aviation services offerings.”
Conference call
information
On Thursday, December 21, 2023, at 3:45 p.m.
Central time, AAR will hold a conference call to discuss the
results. The conference call can be accessed by registering at call
can be accessed by registering at
https://register.vevent.com/register/BIe408558c6b344fb2aca2a3d5d43d47f9.
Once registered, participants will receive a dial-in number and a
unique PIN that will allow them to access the call.
A replay of the conference call will be
available for on-demand listening shortly after the completion of
the call at https://edge.media-server.com/mmc/p/3ot7y4ra and will
remain available for approximately one year.
About AAR
AAR is a global aerospace and defense
aftermarket solutions company with operations in over 20 countries.
Headquartered in the Chicago area, AAR supports commercial and
government customers through four operating segments: Parts Supply,
Repair & Engineering, Integrated Solutions, and Expeditionary
Services. Additional information can be found at aarcorp.com.
Contact: Dylan Wolin – Vice President,
Strategic & Corporate Development and Treasurer |
+1-630-227-2017 | dylan.wolin@aarcorp.com
|
This press release contains certain statements relating to future
results, which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995,
which reflect management’s expectations about future conditions,
including but not limited to expected activities and benefits under
services, supply and distribution agreements, the construction of a
new hangar at the Company’s location at Will Rogers World Airport
in Oklahoma City, our ability to continue to deploy capital to fund
further growth and margin expansion, and the pending acquisition of
the Product Support business of Triumph Group.Forward-looking
statements often address our expected future operating and
financial performance and financial condition, or sustainability
targets, goals, commitments, and other business plans, and often
may also be identified because they contain words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will,” “would,” or similar
expressions and the negatives of those terms.These forward-looking
statements are based on the beliefs of Company management, as well
as assumptions and estimates based on information available to the
Company as of the dates such assumptions and estimates are made,
and are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or
those anticipated, depending on a variety of factors, including:
(i) factors that adversely affect the commercial aviation industry;
(ii) the impact of pandemics and other disease outbreaks, such as
COVID-19, and similar public health threats on air travel,
worldwide commercial activity and our and our customers’ ability to
source parts and components; (iii) a reduction in the level of
sales to the branches, agencies and departments of the U.S.
government and their contractors; (iv) cost overruns and losses on
fixed-price contracts; (v) nonperformance by subcontractors or
suppliers; (vi) changes in or non-compliance with laws and
regulations that may affect certain of our aviation and government
and defense related activities that are subject to licensing,
certification and other regulatory requirements imposed by the FAA,
the U.S. State Department and other regulatory agencies, both
domestic and foreign; (vii) a reduction in outsourcing of
maintenance activity by airlines; (viii) a shortage of the skilled
personnel on whom we depend to operate our business, or work
stoppages; (ix) competition from other companies, including
original equipment manufacturers, some of which have greater
financial resources than we do; (x) financial and operational risks
arising as a result of operating internationally; (xi) inability to
integrate acquisitions effectively and execute our operational and
financial plan related to the acquisitions; (xii) failure to
realize the anticipated benefits of the acquisition of Trax USA
Corp. (“Trax”) and difficulties integrating Trax’s operations;
(xiii) inability to recover our costs due to fluctuations in market
values for aviation products and equipment caused by various
factors, including reductions in air travel, airline bankruptcies,
consolidations and fleet reductions; (xiv) asset impairment charges
we may be required to recognize to reflect the non-recoverability
of our assets or lowered expectations regarding businesses we have
acquired; (xv) threats to our systems technology from equipment
failures, cyber or other security threats or other disruptions;
(xvi) a need to make significant capital expenditures to keep pace
with technological developments in our industry; (xvii) a need to
reduce the carrying value of our assets; (xviii) inability to fully
execute our stock repurchase program and return capital to our
stockholders; (xix) restrictions on paying, or failure to maintain
or pay dividends; (xx) limitations on our ability to access the
debt and equity capital markets or to draw down funds under loan
agreements; (xxi) non-compliance with restrictive and financial
covenants contained in certain of our loan agreements; (xxii)
non-compliance with laws and regulations relating to the formation,
administration and performance of our U.S. government contracts;
(xxiii) exposure to product liability and property claims that may
be in excess of our liability insurance coverage; (xxiv) impacts
from stakeholder and market focus on environmental, social and
governance matters; (xxv) the costs of compliance, and liability
for non-compliance, with environmental regulations, including
future requirements regarding climate change and environmental,
social and governance matters, and (xxvi) failure to complete the
pending acquisition of the Product Support business of Triumph
Group, realize the benefits of the acquisition and successfully
integrate the business into our operations. Should one or more of
those risks or uncertainties materialize adversely, or should
underlying assumptions or estimates prove incorrect, actual results
may vary materially from those described. Those events and
uncertainties are difficult or impossible to predict accurately and
many are beyond our control.For a discussion of these and other
risks and uncertainties, refer to our Annual Report on Form 10-K,
Part I, “Item 1A, Risk Factors” and our other filings from time to
time with the U.S Securities and Exchange Commission. These events
and uncertainties are difficult or impossible to predict accurately
and many are beyond the Company’s control. The risks described in
these reports are not the only risks we face, as additional risks
and uncertainties are not currently known or foreseeable or
impossible to predict accurately or risks that are beyond the
Company’s control or deemed immaterial may materially adversely
affect our business, financial condition or results of operations
in future periods. We assume no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of
anticipated or unanticipated events. |
|
|
|
|
AAR CORP. and subsidiaries |
|
Condensed consolidated statements
of income (In millions except per
share data - unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
545.4 |
|
|
$ |
469.8 |
|
|
$ |
1,095.1 |
|
|
$ |
916.1 |
|
Cost of sales |
|
442.0 |
|
|
|
384.0 |
|
|
|
890.4 |
|
|
|
748.4 |
|
Gross profit |
|
103.4 |
|
|
|
85.8 |
|
|
|
204.7 |
|
|
|
167.7 |
|
Provision for (Recovery of)
credit losses |
|
–– |
|
|
|
(0.1 |
) |
|
|
0.4 |
|
|
|
(0.1 |
) |
Selling, general and administrative |
|
65.7 |
|
|
|
52.8 |
|
|
|
140.4 |
|
|
|
102.9 |
|
Earnings (Loss)
from joint ventures |
|
0.6 |
|
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
(1.3 |
) |
Operating income |
|
38.3 |
|
|
|
32.4 |
|
|
|
63.6 |
|
|
|
63.6 |
|
Pension settlement charge |
|
–– |
|
|
|
–– |
|
|
|
(26.7 |
) |
|
|
–– |
|
Losses related to sale and exit of business |
|
(0.9 |
) |
|
|
(0.1 |
) |
|
|
(1.6 |
) |
|
|
(0.1 |
) |
Interest expense, net |
|
(5.6 |
) |
|
|
(2.0 |
) |
|
|
(11.0 |
) |
|
|
(3.0 |
) |
Other income (expense), net |
|
(0.1 |
) |
|
|
0.5 |
|
|
|
(0.1 |
) |
|
|
0.7 |
|
Income from continuing operations before income tax
expense |
|
31.7 |
|
|
|
30.8 |
|
|
|
24.2 |
|
|
|
61.2 |
|
Income tax expense |
|
7.9 |
|
|
|
8.3 |
|
|
|
1.0 |
|
|
|
16.4 |
|
Income from continuing operations |
|
23.8 |
|
|
|
22.5 |
|
|
|
23.2 |
|
|
|
44.8 |
|
Income from discontinued operations |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
0.4 |
|
Net income |
$ |
23.8 |
|
|
$ |
22.5 |
|
|
$ |
23.2 |
|
|
$ |
45.2 |
|
|
|
|
|
|
|
|
|
Earnings per share – Basic: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.67 |
|
|
$ |
0.65 |
|
|
$ |
0.66 |
|
|
$ |
1.28 |
|
Earnings from discontinued
operations |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
0.01 |
|
Earnings per share – Basic |
$ |
0.67 |
|
|
$ |
0.65 |
|
|
$ |
0.66 |
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
Earnings per share – Diluted: |
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
0.67 |
|
|
$ |
0.64 |
|
|
$ |
0.65 |
|
|
$ |
1.26 |
|
Earnings from discontinued
operations |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
0.01 |
|
Earnings per share – Diluted |
$ |
0.67 |
|
|
$ |
0.64 |
|
|
$ |
0.65 |
|
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
Share data: |
|
|
|
|
|
|
|
Weighted average shares outstanding – Basic |
|
34.9 |
|
|
|
34.2 |
|
|
|
34.9 |
|
|
|
34.6 |
|
Weighted average shares outstanding – Diluted |
|
35.3 |
|
|
|
34.7 |
|
|
|
35.3 |
|
|
|
35.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR CORP. and subsidiaries |
|
Condensed consolidated balance sheets (In
millions) |
November 30, 2023 |
|
May 31, 2023 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
65.1 |
|
|
$ |
68.4 |
|
Restricted cash |
|
10.4 |
|
|
|
13.4 |
|
Accounts receivable, net |
|
246.4 |
|
|
|
241.3 |
|
Contract assets |
|
99.3 |
|
|
|
86.9 |
|
Inventories, net |
|
645.9 |
|
|
|
574.1 |
|
Rotable assets and equipment on or available for
lease |
|
55.1 |
|
|
|
50.6 |
|
Assets of discontinued operations |
|
11.7 |
|
|
|
13.5 |
|
Other current assets |
|
60.5 |
|
|
|
49.7 |
|
Total current assets |
|
1,194.4 |
|
|
|
1,097.9 |
|
Property, plant, and equipment, net |
|
132.6 |
|
|
|
126.1 |
|
Goodwill and intangible assets, net |
|
237.5 |
|
|
|
239.5 |
|
Rotable assets supporting long-term programs |
|
177.4 |
|
|
|
178.1 |
|
Operating lease right-of-use assets, net |
|
90.4 |
|
|
|
63.7 |
|
Other non-current assets |
|
133.3 |
|
|
|
127.8 |
|
Total assets |
$ |
1,965.6 |
|
|
$ |
1,833.1 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Accounts payable and accrued liabilities |
$ |
368.7 |
|
|
$ |
338.1 |
|
Liabilities of discontinued operations |
|
11.4 |
|
|
|
13.4 |
|
Total current liabilities |
|
380.1 |
|
|
|
351.5 |
|
Long-term debt |
|
275.0 |
|
|
|
269.7 |
|
Operating lease liabilities |
|
73.2 |
|
|
|
48.2 |
|
Other liabilities and deferred revenue |
|
81.8 |
|
|
|
64.6 |
|
Total liabilities |
|
810.1 |
|
|
|
734.0 |
|
Equity |
|
1,155.5 |
|
|
|
1,099.1 |
|
Total liabilities and equity |
$ |
1,965.6 |
|
|
$ |
1,833.1 |
|
|
|
|
|
|
|
|
|
|
AAR CORP. and subsidiaries |
|
Condensed consolidated statements of cash flows
(In millions – unaudited) |
Three months ended November
30, |
|
Six months ended
November 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
23.8 |
|
|
$ |
22.5 |
|
|
$ |
23.2 |
|
|
$ |
45.2 |
|
Income from discontinued
operations |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
(0.4 |
) |
Income from continuing operations |
|
23.8 |
|
|
|
22.5 |
|
|
|
23.2 |
|
|
|
44.8 |
|
Adjustments to reconcile income from continuing operations
to net cash provided by (used in) operating
activities |
|
|
|
|
|
|
|
Depreciation and
amortization |
|
8.7 |
|
|
|
6.5 |
|
|
|
17.1 |
|
|
|
13.3 |
|
Stock-based compensation
expense |
|
3.6 |
|
|
|
2.8 |
|
|
|
7.9 |
|
|
|
6.9 |
|
Pension settlement charge |
|
–– |
|
|
|
–– |
|
|
|
26.7 |
|
|
|
–– |
|
Provision for (Recovery of) credit
losses |
|
–– |
|
|
|
(0.1 |
) |
|
|
0.4 |
|
|
|
(0.1 |
) |
Changes in certain assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
34.2 |
|
|
|
(4.3 |
) |
|
|
(6.3 |
) |
|
|
(12.0 |
) |
Contract
assets |
|
(0.1 |
) |
|
|
4.9 |
|
|
|
(12.4 |
) |
|
|
(9.3 |
) |
Inventories |
|
(31.7 |
) |
|
|
(18.8 |
) |
|
|
(71.5 |
) |
|
|
(44.8 |
) |
Prepaid expenses and other current
assets |
|
(1.4 |
) |
|
|
(6.8 |
) |
|
|
(10.2 |
) |
|
|
(0.1 |
) |
Rotable assets supporting long-term programs |
|
(3.0 |
) |
|
|
(5.0 |
) |
|
|
(4.0 |
) |
|
|
(8.1 |
) |
Accounts payable and accrued liabilities |
|
(7.0 |
) |
|
|
(32.4 |
) |
|
|
47.2 |
|
|
|
(21.2 |
) |
Deferred revenue on long-term programs |
|
(5.2 |
) |
|
|
1.7 |
|
|
|
(9.5 |
) |
|
|
8.2 |
|
Other |
|
(4.5 |
) |
|
|
(16.9 |
) |
|
|
(9.7 |
) |
|
|
(16.5 |
) |
Net cash provided by
(used in) operating activities – continuing
operations |
|
17.4 |
|
|
|
(45.9 |
) |
|
|
(1.1 |
) |
|
|
(38.9 |
) |
Net cash used in operating activities – discontinued
operations |
|
–– |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
Net cash provided by (used in) operating
activities |
|
17.4 |
|
|
|
(46.1 |
) |
|
|
(1.3 |
) |
|
|
(39.3 |
) |
|
|
|
|
|
|
|
|
Cash flows used in investing activities: |
|
|
|
|
|
|
|
Property, plant, and
equipment
expenditures |
|
(7.3 |
) |
|
|
(6.1 |
) |
|
|
(16.4 |
) |
|
|
(12.8 |
) |
Other |
|
(1.4 |
) |
|
|
(1.5 |
) |
|
|
(3.9 |
) |
|
|
(5.5 |
) |
Net cash used in investing activities |
|
(8.7 |
) |
|
|
(7.6 |
) |
|
|
(20.3 |
) |
|
|
(18.3 |
) |
|
|
|
|
|
|
|
|
Cash flows provided by (used in) financing
activities: |
|
|
|
|
|
|
|
Short-term borrowings
(repayments) on
Revolving Credit Facility,
net |
|
(30.0 |
) |
|
|
83.0 |
|
|
|
5.0 |
|
|
|
98.0 |
|
Purchase of treasury
stock |
|
–– |
|
|
|
(28.2 |
) |
|
|
–– |
|
|
|
(50.1 |
) |
Other |
|
6.6 |
|
|
|
1.7 |
|
|
|
10.3 |
|
|
|
2.1 |
|
Net cash provided by (used in) financing
activities |
|
(23.4 |
) |
|
|
56.5 |
|
|
|
15.3 |
|
|
|
50.0 |
|
Effect of exchange rate changes on
cash |
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
(0.1 |
) |
Increase (Decrease) in cash and cash
equivalents |
|
(14.7 |
) |
|
|
2.8 |
|
|
|
(6.3 |
) |
|
|
(7.7 |
) |
Cash, cash equivalents, and restricted cash at beginning of
period |
|
90.2 |
|
|
|
48.4 |
|
|
|
81.8 |
|
|
|
58.9 |
|
Cash, cash equivalents, and restricted cash at end of
period |
$ |
75.5 |
|
|
$ |
51.2 |
|
|
$ |
75.5 |
|
|
$ |
51.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR CORP. and subsidiaries |
|
Third-party sales by segment (In millions -
unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Parts
Supply |
$ |
227.6 |
|
$ |
183.6 |
|
|
$ |
464.4 |
|
$ |
352.2 |
|
Repair & Engineering |
|
145.4 |
|
|
134.8 |
|
|
|
282.9 |
|
|
262.4 |
|
Integrated Solutions |
|
156.6 |
|
|
127.3 |
|
|
|
312.9 |
|
|
255.1 |
|
Expeditionary Services |
|
15.8 |
|
|
24.1 |
|
|
|
34.9 |
|
|
46.4 |
|
|
$ |
545.4 |
|
$ |
469.8 |
|
|
$ |
1,095.1 |
|
$ |
916.1 |
|
Operating income by segment (In millions-
unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Parts
Supply |
$ |
28.4 |
|
$ |
21.3 |
|
|
$ |
43.5 |
|
$ |
39.6 |
|
Repair & Engineering |
|
11.3 |
|
|
8.6 |
|
|
|
20.4 |
|
|
16.0 |
|
Integrated Solutions |
|
6.4 |
|
|
7.1 |
|
|
|
14.1 |
|
|
15.4 |
|
Expeditionary Services |
|
0.9 |
|
|
2.0 |
|
|
|
2.2 |
|
|
4.3 |
|
|
|
47.0 |
|
|
39.0 |
|
|
|
80.2 |
|
|
75.3 |
|
Corporate and other |
|
(8.7 |
) |
|
(6.6 |
) |
|
|
(16.6 |
) |
|
(11.7 |
) |
|
$ |
38.3 |
|
$ |
32.4 |
|
|
$ |
63.6 |
|
$ |
63.6 |
|
|
Adjusted income from continuing operations,
adjusted diluted earnings per share from continuing operations,
adjusted cost of sales, adjusted gross profit margin, adjusted
operating margin, adjusted cash provided by (used in) operating
activities from continuing operations, adjusted EBITDA, net debt,
and net debt to adjusted EBITDA (net leverage) are “non-GAAP
financial measures” as defined in Regulation G of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). We believe
these non-GAAP financial measures are relevant and useful for
investors as they illustrate our core operating performance, cash
flows and leverage unaffected by the impact of certain items that
management does not believe are indicative of our ongoing and core
operating activities. When reviewed in conjunction with our GAAP
results and the accompanying reconciliations, we believe these
non-GAAP financial measures provide additional information that is
useful to gain an understanding of the factors and trends affecting
our business and provide a means by which to compare our operating
performance and leverage against that of other companies in the
industries we compete. These non-GAAP measures should be considered
as a supplement to, and not as a substitute for, or superior to,
the corresponding measures calculated in accordance with GAAP.
Our non-GAAP financial measures reflect
adjustments for certain items including, but not limited to, the
following:
- Investigation and remediation
compliance costs comprised of legal and professional fees related
to addressing potential violations of the U.S. Foreign Corrupt
Practices Act, which we self-reported to the U.S. Department of
Justice and other agencies.
- Contract termination/restructuring
costs comprised of gains and losses that are recognized at the time
of modifying, terminating, or restructuring certain customer and
vendor contracts, including forward loss provisions on long-term
contracts.
- Customer bankruptcy and credit
charges (recoveries) reflecting the impact of bankruptcies and
other credit charges primarily resulting from the significant
impact of the COVID-19 pandemic on the commercial aviation
industry.
- Losses related to the sale and exit
from our Composites manufacturing business, including legal fees
for the performance guarantee associated with the Composites’ A220
aircraft contract.
- Expenses associated with recent
acquisition activity including professional fees for legal, due
diligence, and other acquisition activities, intangible asset
amortization, and compensation expense related to contingent
consideration and retention agreements.
- Pension settlement charges
associated with the settlement and termination of our frozen
defined benefit pension plan.
- Legal judgments related to or
impacted by the Russian/Ukraine conflict.
Adjusted EBITDA is income from continuing
operations before interest income (expense), other income
(expense), income taxes, depreciation and amortization, stock-based
compensation, and items of an unusual nature including but not
limited to business divestitures and acquisitions, workforce
actions, COVID-related subsidies and costs, impairment and exit
charges, facility consolidation and repositioning costs,
investigation and remediation compliance costs, equity investment
gains and losses, pension settlement charges, legal judgments,
acquisition and amortization expenses from recent acquisition
activity, and significant customer events such as early
terminations, contract restructurings, forward loss provisions, and
bankruptcies.
Pursuant to the requirements of Regulation G of
the Exchange Act, we are providing the following tables that
reconcile the above-mentioned non-GAAP financial measures to the
most directly comparable GAAP financial measures:
Adjusted income from continuing operations (In
millions - unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Income from continuing operations |
$ |
23.8 |
|
$ |
22.5 |
|
|
$ |
23.2 |
|
$ |
44.8 |
|
Investigation and remediation
compliance costs |
|
2.6 |
|
|
1.1 |
|
|
|
3.7 |
|
|
1.9 |
|
Acquisition and amortization
expenses |
|
3.1 |
|
|
–– |
|
|
|
5.9 |
|
|
–– |
|
Losses related to sale and exit of business |
|
0.9 |
|
|
0.1 |
|
|
|
1.6 |
|
|
0.1 |
|
Pension settlement charge |
|
–– |
|
|
–– |
|
|
|
26.7 |
|
|
–– |
|
Russian bankruptcy court judgment |
|
–– |
|
|
–– |
|
|
|
11.2 |
|
|
–– |
|
Contract termination/restructuring costs and loss
provisions, net |
|
–– |
|
|
2.3 |
|
|
|
–– |
|
|
2.0 |
|
Customer bankruptcy and credit
(recoveries) |
|
–– |
|
|
(0.3 |
) |
|
|
–– |
|
|
(0.3 |
) |
Gains on equity investments |
|
–– |
|
|
(0.9 |
) |
|
|
–– |
|
|
(0.9 |
) |
Government COVID-related subsidies |
|
–– |
|
|
–– |
|
|
|
–– |
|
|
(0.7 |
) |
Costs related to strategic projects |
|
–– |
|
|
–– |
|
|
|
–– |
|
|
(0.2 |
) |
Severance charges |
|
–– |
|
|
–– |
|
|
|
–– |
|
|
0.1 |
|
Tax effect on adjustments
(a) |
|
(1.6 |
) |
|
(0.6 |
) |
|
|
(16.2 |
) |
|
(0.5 |
) |
Adjusted income from continuing operations |
$ |
28.8 |
|
$ |
24.2 |
|
|
$ |
56.1 |
|
$ |
46.3 |
|
(a) Calculation uses estimated statutory
tax rates on non-GAAP adjustments except for the tax effect of the
pension settlement charge, which includes income taxes previously
recognized in accumulated other comprehensive loss.
Adjusted diluted earnings per share from continuing
operations (Unaudited) |
Three months ended November
30, |
|
Six months ended
November 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Diluted earnings per share from continuing
operations |
$ |
0.67 |
|
$ |
0.64 |
|
|
$ |
0.65 |
|
$ |
1.26 |
|
Investigation and remediation compliance
costs |
|
0.08 |
|
|
0.03 |
|
|
|
0.10 |
|
|
0.05 |
|
Acquisition and amortization expenses |
|
0.09 |
|
|
–– |
|
|
|
0.17 |
|
|
–– |
|
Losses related to sale and exit of business |
|
0.02 |
|
|
–– |
|
|
|
0.04 |
|
|
–– |
|
Pension settlement charge |
|
–– |
|
|
–– |
|
|
|
0.76 |
|
|
–– |
|
Russian bankruptcy court judgment |
|
–– |
|
|
–– |
|
|
|
0.32 |
|
|
–– |
|
Contract termination/restructuring costs and loss
provisions, net |
|
–– |
|
|
0.07 |
|
|
|
–– |
|
|
0.06 |
|
Customer bankruptcy and credit (recoveries) |
|
–– |
|
|
(0.01 |
) |
|
|
–– |
|
|
(0.01 |
) |
Gains on equity investments |
|
–– |
|
|
(0.03 |
) |
|
|
–– |
|
|
(0.02 |
) |
Government COVID-related subsidies |
|
–– |
|
|
–– |
|
|
|
–– |
|
|
(0.02 |
) |
Tax effect on
adjustments
(a) |
|
(0.05 |
) |
|
(0.01 |
) |
|
|
(0.46 |
) |
|
(0.02 |
) |
Adjusted diluted earnings per share from continuing
operations |
$ |
0.81 |
|
$ |
0.69 |
|
|
$ |
1.58 |
|
$ |
1.30 |
|
(b) Calculation uses estimated statutory tax
rates on non-GAAP adjustments except for the tax effect of the
pension settlement charge, which includes income taxes previously
recognized in accumulated other comprehensive loss.
Adjusted gross profit margin (In millions -
unaudited) |
Three months ended |
|
November 30,2023 |
August 31,2023 |
November 30,2022 |
Sales |
$ |
545.4 |
|
$ |
549.7 |
|
$ |
469.8 |
|
|
|
|
|
Cost of sales |
$ |
442.0 |
|
$ |
448.4 |
|
$ |
384.0 |
|
Contract termination/restructuring costs and loss
provisions, net |
|
–– |
|
|
–– |
|
|
(2.3 |
) |
Adjusted cost of sales |
$ |
442.0 |
|
$ |
448.4 |
|
$ |
381.7 |
|
|
|
|
|
Adjusted gross profit margin |
|
19.0 |
% |
|
18.4 |
% |
|
18.8 |
% |
Adjusted operating margin (In millions -
unaudited) |
Three months ended |
|
November
30,2023 |
August 31,2023 |
November 30,2022 |
Sales |
$ |
545.4 |
|
$ |
549.7 |
|
$ |
469.8 |
|
|
|
|
|
Operating income |
$ |
38.3 |
|
$ |
25.3 |
|
$ |
32.4 |
|
Investigation and remediation costs |
|
2.6 |
|
|
1.1 |
|
|
1.1 |
|
Acquisition and
amortization expenses |
|
3.1 |
|
|
2.8 |
|
|
–– |
|
Russian bankruptcy court judgment |
|
–– |
|
|
11.2 |
|
|
–– |
|
Customer bankruptcy and
credit recoveries |
|
–– |
|
|
–– |
|
|
(0.3 |
) |
Contract termination/restructuring costs and loss
provisions, net |
|
–– |
|
|
–– |
|
|
2.3 |
|
Adjusted operating income |
$ |
44.0 |
|
$ |
40.4 |
|
$ |
35.5 |
|
|
|
|
|
Adjusted operating margin |
|
8.1 |
% |
|
7.3 |
% |
|
7.6 |
% |
Adjusted cash provided by (used in) operating activities
from continuing operations (In millions -
unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Cash provided by (used
in) operating activities
from continuing operations |
$ |
17.4 |
|
$ |
(45.9 |
) |
|
$ |
(1.1 |
) |
$ |
(38.9 |
) |
Amounts outstanding on accounts receivable financing
program: |
|
|
|
|
|
Beginning of period |
|
13.7 |
|
|
14.9 |
|
|
|
12.8 |
|
|
15.0 |
|
End of period |
|
(13.7 |
) |
|
(16.1 |
) |
|
|
(13.7 |
) |
|
(16.1 |
) |
Adjusted cash provided by (used in) operating activities
from continuing operations |
$ |
17.4 |
|
$ |
(47.1 |
) |
|
$ |
(2.0 |
) |
$ |
(40.0 |
) |
Adjusted EBITDA (In millions - unaudited) |
Three months ended November
30, |
|
Six months ended November
30, |
|
Year endedMay 31, |
|
|
2023 |
|
2022 |
|
|
|
2023 |
|
2022 |
|
|
|
2023 |
|
Net income |
$ |
23.8 |
$ |
22.5 |
|
|
$ |
23.2 |
$ |
45.2 |
|
|
$ |
90.2 |
|
Income from discontinued operations |
|
–– |
|
–– |
|
|
|
–– |
|
(0.4 |
) |
|
|
(0.4 |
) |
Income tax expense |
|
7.9 |
|
8.3 |
|
|
|
1.0 |
|
16.4 |
|
|
|
31.4 |
|
Other expense (income), net |
|
0.1 |
|
(0.5 |
) |
|
|
0.1 |
|
(0.7 |
) |
|
|
0.8 |
|
Interest expense, net |
|
5.6 |
|
2.0 |
|
|
|
11.0 |
|
3.0 |
|
|
|
11.2 |
|
Depreciation and amortization |
|
8.7 |
|
6.5 |
|
|
|
17.1 |
|
13.3 |
|
|
|
27.9 |
|
Investigation and remediation compliance
costs |
|
2.6 |
|
1.1 |
|
|
|
3.7 |
|
1.9 |
|
|
|
4.7 |
|
Pension settlement charge |
|
–– |
|
–– |
|
|
|
26.7 |
|
–– |
|
|
|
–– |
|
Russian bankruptcy court judgment |
|
–– |
|
–– |
|
|
|
11.2 |
|
–– |
|
|
|
1.8 |
|
Losses related to
sale and exit of
business |
|
0.9 |
|
0.1 |
|
|
|
1.6 |
|
0.1 |
|
|
|
0.7 |
|
Acquisition-related
expenses |
|
2.1 |
|
–– |
|
|
|
3.9 |
|
–– |
|
|
|
6.2 |
|
Customer bankruptcy and credit charges
(recoveries) |
|
–– |
|
(0.3 |
) |
|
|
–– |
|
(0.3 |
) |
|
|
1.5 |
|
Government COVID-related subsidies |
|
–– |
|
–– |
|
|
|
–– |
|
(0.7 |
) |
|
|
(1.6 |
) |
Contract termination/restructuring costs and
loss provisions, net |
|
–– |
|
2.3 |
|
|
|
–– |
|
2.0 |
|
|
|
2.0 |
|
Costs related to strategic projects |
|
–– |
|
–– |
|
|
|
–– |
|
(0.2 |
) |
|
|
(0.2 |
) |
Severance charges |
|
–– |
|
–– |
|
|
|
–– |
|
0.1 |
|
|
|
0.1 |
|
Stock-based compensation |
|
3.6 |
|
2.8 |
|
|
|
7.9 |
|
6.9 |
|
|
|
13.5 |
|
Adjusted EBITDA |
$ |
55.3 |
$ |
44.8 |
|
|
$ |
107.4 |
$ |
86.6 |
|
|
$ |
189.8 |
|
Net debt (In
millions - unaudited) |
November 30,2023 |
|
November 30,2022 |
Total debt |
$ |
277.0 |
|
|
$ |
198.0 |
|
Less: Cash and cash equivalents |
|
(65.1 |
) |
|
|
(49.0 |
) |
Net debt |
$ |
211.9 |
|
|
$ |
149.0 |
|
Net debt to adjusted EBITDA (In millions -
unaudited) |
|
|
|
|
Adjusted EBITDA for the year ended May 31,
2023 |
$ |
189.8 |
|
|
Less: Adjusted EBITDA for the six months ended November 30,
2022 |
|
(86.6 |
) |
|
Plus: Adjusted EBITDA for the six months ended
November 30,
2023 |
|
107.4 |
|
|
Adjusted EBITDA for the twelve months ended November 30,
2023 |
$ |
210.6 |
|
|
Net debt at November 30, 2023 |
$ |
211.9 |
|
|
Net debt to Adjusted EBITDA |
|
1.01 |
|
|
AAR (NYSE:AIR)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
AAR (NYSE:AIR)
Gráfica de Acción Histórica
De May 2023 a May 2024